Chris and all,
Buying opportunity? I think opportunities are relative. Relative to other places where your capital can be deployed.
Your portfolio of 10 is based on fast growth and corresponding fast price appreciation. Now, I don’t practice portfolio construction and diversification, but I do have companies in my portfolio for various reasons. LGIH is my largest holding because “I think opportunities are relative”. LGIH is a company that I can study and understand close to 100%. It is houses, not nano-bots carrying genetically altered cells while transmitting data to the cloud via ultra short range signals to an chip embedded in the patient’s bicep.
Buying LGIH at under $45 would be planned as a trading position for me. The last few days of weakness in LGIH are not reflected in the home builders index or similar home builder companies. I think there is 25% upside still by January to March time frame. That is based on my projected earnings and 10.5 trailing p/e, or 13 forward p/e if analysts and market are enthused.
BTW, my top holdings, descending order, are LGIH, SHOP, Casey’s General Stores, Hasbro, Facebook, MITK, NVDA, SQ, KITE, IPG Photonics, TLND. I also have a little BEAT and TWLO. That is basically 12 real positions plus a Phoenix 1 basket which I treat as a single holding since the FOOL does the research and DD. Casey’s is due a haircut. CASY and LGIH found their ways into my portfolio as macro based decision where I wanted some heartland America businesses amidst worries on international trade and China concerns. CASY is a long term growth story whereas LGIH has a 2-3 year shelf life in my opinion. Both with cyclical risks.
I have cash which is targeted to add to SHOP, NVDA and SQ and KITE. But only at one-month intervals. Takes me longer to build the portfolio than it takes LGIH to build a house.
So, not only are investing opportunities relative, but investing needs are relative. Building for retirement or retired. Portfolio $0.1 million or $1 million or $70 million? Living expenses $30,000, $100,000 or $300,000? But Chris is right. If one is investing for rapid portfolio growth, LGIH is not going to double from here the way SHOP, NVDA and SQ and KITE might. But if I see even 10% in 4 to 6 months with a company I understand, I’ll take it. It will help fund my 4% mandatory IRA withdrawal.